Thursday, 15 February 2018
Treasury Laws Amendment (Banking Measures No. 1) Bill 2017; Second Reading
I rise today to speak on the Treasury Laws Amendment (Banking Measures No. 1) Bill 2017 on behalf of the Australian Greens. The bill amends the Banking Act 1959 to enable the Australian Prudential Regulation Authority, known as APRA, to make rules and directions relating to the provision of finance by non-authorised deposit-taking-institution lenders, which, as APRA has identified, may materially contribute to risks of instability in the Australian financial system. The bill removes restrictions on the use of the term 'bank' and inserts an objects provision. It also amends the National Consumer Credit Protection Act 2009 to require that the suitability of a credit card contract is assessed on the consumer's ability to pay the credit limit within a certain period and prohibits providers from making unsolicited credit limit offers in relation to credit card contracts and from retrospectively charging interest on credit card balances. Finally, it enables consumers to reduce credit card limits and terminate credit card contracts including by online means. The Greens will be supporting this bill. We don't see anything too controversial in it.
I note APRA's comments that were provided to the committee that the non-ADI, non-licensed, non-regulated finance market—I call it the shadow banking sector—is roughly only four to five per cent of the total market at this point in time, and is not enough to cause instability. But this is an issue that's been discussed all around the world, especially in the last five years, by regulators in just about every country and international institutions. The growth in the unregulated shadow banking sector is something that we do need to keep a close eye on. We're quite comfortable with giving APRA extra powers to monitor that sector, collect data and act, should they feel that there's any instability in the financial system brought on by the growth in the shadow banking sector.
On the credit card changes, I echo Labor's comments that we'll be reviewing these changes over time to see how the banking sectors themselves respond to this. You don't get between them and a buck, basically, so I'm sure they'll find a way to continue to squeeze Australians through the credit card market, but, nevertheless, the bill's provisions are good.
In fact, I actually wrote to the regulator and spoke to them in estimates last year after being contacted by a friend who had had unsolicited attempts to increase his credit card limit from his bank. He was told how easy it would be if he just pressed a button on an email, which led to a doubling of his credit card limit. These kinds of things can be dangerous and they need to be monitored. The Greens will be supporting this bill today.